Executive Recruitment in LATCOs: Why Traditional Approaches Don't Always Work

When a council's trading company struggles to appoint a managing director, the market often gets the blame. Sometimes that's fair. The pool of people who have led a commercial operation within a public governance framework is small and pay can be a genuine constraint. But having worked on a good number of these appointments, I'd say the market is rarely the whole story. How the role is defined, and how the opportunity is presented, can make just as much difference.

Hybrid by design

A LATCO leader answers to a board and to a shareholder whose priorities usually align, but not always. They are expected to grow income and manage margins while delivering a public service, often within Teckal limits on trading. They operate in a company structure but under a degree of political scrutiny, and members' expectations of the business can shift over time. The role has elements of both a council directorate and a private business. Recruitment approaches borrowed wholesale from either can miss some of what it demands.

One of the key challenges is that leaders can be held accountable for commercial performance without always having the autonomy they would expect in a private business. Equally, decisions that make commercial sense may not always align neatly with the council's wider priorities. Understanding how a candidate would navigate these tensions is an important part of assessing whether they are right for the role.

Commerciality and public purpose

The balance between the two varies. A start-up housing company, a mature care provider and a waste business under financial pressure will each need something slightly different from their leader. I find it helps if the board has a reasonably clear view of that weighting early on, even if it continues to develop through the process. Clarity about the next few years gives a panel firmer ground when choosing between strong candidates with different strengths.

It also helps boards to consider what success will look like in practice, including the commercial, operational and public service outcomes they need the incoming leader to deliver. Without that clarity, there is a risk of appointing someone with an impressive track record who is nevertheless the wrong fit for the organisation's immediate priorities.

What candidates are weighing up

Many candidates are drawn by the autonomy a company model can offer and the chance to see the results of their work. Most also have questions. In my conversations with potential applicants, the same ones come up again and again. How much freedom does the board actually have? How settled is the relationship with the shareholder? What happens if political priorities change? Those coming from the private sector may wonder about pace and decision-making, while those from councils may be wary of commercial risk. Pay and package matter, but open, well-informed answers to these questions can carry real weight.

For boards, this means selling the opportunity is about more than the role itself. Candidates need a realistic picture of the organisation's ambitions, the support they can expect and the constraints they may face. Being able to explain these honestly can help build confidence in the opportunity and avoid mismatched expectations once someone is in post.

How boards can position themselves

A few practical steps help:

• Agree the role's mandate with the council before going to market.
• Be open about the challenges, which experienced candidates will usually find anyway.
• Make the chair accessible, since candidates are weighing up a working relationship as well as a job.
• Design a panel that brings both commercial and public sector perspectives.
• Assess judgement, not just experience, by exploring how candidates would respond when commercial objectives and public service priorities compete.
• Use scenario-based questions drawn from the organisation's real challenges, such as managing financial pressure while maintaining service quality, or responding when shareholder expectations change.

Where traditional approaches can fall short

Each conventional route has strengths and limits:

• Advertising reaches active candidates but tends to draw mainly from within the sector.
• Commercial search can surface able leaders with little experience of democratic accountability.
• Standard competency frameworks support consistency but may not fully test how someone handles moments when commercial and public interests diverge.

A more tailored approach usually blends these. It starts with a success profile grounded in the organisation's circumstances. It looks across adjacent markets such as contract-based services, regulated sectors, housing and other council-owned companies. And it adds scenario-based discussion to the assessment.

This wider search can be particularly valuable where the strongest candidates may not have worked in a LATCO before, but have transferable experience of balancing commercial performance, complex governance and public-facing services. The key is to assess not only what they have achieved, but how they achieved it and whether that experience translates to the organisation's operating environment.

The role of a recruitment partner

A good partner brings reach, along with an understanding of governance and shareholder dynamics that helps in two directions. It can explain the model to candidates who are unfamiliar with it, and test whether they would be comfortable working within it. I recently worked on a finance and resources appointment for an environmental services company where the role combined corporate leadership with responsibility for a frontline service. Time spent refining the success profile at the outset helped make sure every finalist was judged appointable. For a council-owned development company appointing a new Chair and two non-executives against a politically sensitive backdrop, a carefully positioned campaign meant all three roles were filled first time.

These examples highlight the importance of understanding an organisation's context before beginning a search. Identifying candidates with the right experience is only part of the process; understanding what will motivate them to consider the opportunity, and assessing whether they can operate effectively within the organisation's environment, is just as important.

At Tile Hill, this understanding is central to our approach to executive search. By working closely with boards to define the brief, understand the organisation's ambitions and identify the qualities needed to succeed, we can help widen the search beyond obvious candidates and focus on people who can deliver in the specific context of a LATCO.

There is no single formula for LATCO appointments. In my experience, boards that are clear on what they need, candid about what they offer and willing to look beyond the traditional candidate pool give themselves the best chance of finding the right leader. Crucially, that ambition needs to carry through into the selection process itself. It is not enough to consider a broader range of candidates at the outset if the assessment ultimately favours familiar backgrounds and conventional career paths. A well-designed process should give candidates with different but relevant experience a fair opportunity to demonstrate their potential, focusing on their judgement, transferable skills, and ability to succeed in the specific context of a LATCO.